Liverpool House Price Survey


What Do House Price Surveys Tell Us?

The news seems to be full of house price surveys. But with some saying prices are rising and others declaring the market is cooling, what do these surveys really say?

In August, the papers were full of a survey which said that house prices had leapt by £3,400 in just one month. This news was often reported in connection with the findings of another survey, which suggested that a first home will cost £1million in just 17 years' time.

However, these headlines do not show an entirely accurate picture. In fact, when the findings of other surveys are taken into account it seems the market is cooling slightly.

There are seven major bodies who release surveys on house prices: the Land Registry; the Department for Communities and Local Government (DCLG); Nationwide; Halifax; Royal Institute of Chartered Surveyors; Hometrack, and Rightmove.

The £3,400 leap in prices was calculated by the DCLG. This survey is accurate in many ways however, it is heavily influenced by the amount of money spent, rather than the number of transactions carried out. Thus London and the South have a huge impact on its findings.

Surveys by RICS, Nationwide, Rightmove and Hometrack all suggest that in the last couple of months prices have steadied. In addition to this, a further rise in interest rates to 6% is still expected by some in the autumn. This should cool the market further.

And as for that £1million price tag on a first home? The building society responsible for that figure, Stroud and Swindon, relies on three things firstly that mortgages will be offered at seven times the predicted average salary, secondly that the typical worker will be earning £136, 074 per year and finally that house prices continue to rise with the startling velocity seen over the last five years.

With the world's economy reeling from the aftershocks of America's economic crisis, it is unlikely that UK banks and building societies will continue to lend money to sub-prime mortgage candidates. In addition to that, the average wage currently stands at around £24,000 and surveys are showing a market that appears to be steadying.

There is no need to panic just yet.